Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules 3.31, 3.33 and 3.34, 43701-43704 [2021-16966]
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Federal Register / Vol. 86, No. 151 / Tuesday, August 10, 2021 / Notices
due to COVID–19 related considerations
(the ‘‘Qualifying Firms’’).5
Because the Trading Floor continued
to operate with reduced capacity, the
Exchange extended the fee waivers for
Qualifying Firms through ‘‘the earlier of
the first full month of a full reopening
of the Trading Floor facilities to Floor
personnel or June 2021’’.
As the Trading Floor re-opened
without social distancing requirements
for vaccinated personnel on June 25,
2021 and the expiration date has passed,
the Exchange is submitting this
proposed rule change to remove the
language related to the fee waivers from
the Fee Schedule.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,6 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,7 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Exchange believes that the
proposed modifications to the Fee
Schedule to remove expired fee waivers
that the Exchange no longer offers are
reasonable, equitable, and not unfairly
discriminatory because the changes
would provide clarity to the Fee
Schedule, and do not affect any current
activity by any ATP Holder.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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In accordance with Section 6(b)(8) of
the Act, the Exchange does not believe
that the proposed rule change would
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Instead, the proposed change is meant
to add clarity and transparency to the
Fee Schedule to the benefit of all market
participants that trade on the Exchange.
5 See Securities Exchange Act Release Nos. 89241
(July 7, 2020), 85 FR 42034 (July 13, 2020) (SR–
NYSEAMER–2020–47); 89482 (August 5, 2020), 85
FR 48577 (August 11, 2020) (SR–NYSEAMER–
2020–55); 89692 (August 27, 2020), 85 FR 54611
(September 2, 2020) (SR–NYSEAMER–2020–65);
90193 (October 15, 2020), 85 FR 67069 (October 21,
2020) (SR–NYSEAMER–2020–76); 90833 (December
30, 2020), 86 FR 641 (January 6, 2021) (SR–
NYSEAMER–2020–87), 91366 (March 19, 2021) 86
FR 15987 (March 25, 2021) (SR–NYSEAMER–2021–
14).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(4) and (5).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 8 of the Act and
subparagraph (f)(2) of Rule 19b–4 9
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 10 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEAMER–2021–34 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEAMER–2021–34. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
10 15 U.S.C. 78s(b)(2)(B).
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEAMER–2021–34, and
should be submitted on or before
August 31, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–16964 Filed 8–9–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92562; File No. SR–CBOE–
2021–043]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rules 3.31,
3.33 and 3.34
August 4, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 22,
2021, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by the
8 15
11 17
9 17
1 15
PO 00000
Frm 00078
Fmt 4703
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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43701
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Federal Register / Vol. 86, No. 151 / Tuesday, August 10, 2021 / Notices
Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rules 3.31, 3.34 and 3.33. The text of
the proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is available on the Exchange’s website
(https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend
certain registration rules including (i)
Rule 3.31 to update an incorrect crossreference, (ii) Rule 3.33 to update a
Regulatory Element Program reference
and (iii) Rule 3.34 to provide the option
of filing an initial or a transfer electronic
Form U4 filing and any amendments to
the disclosure information on Form U4
based on a manually or an electronically
signed copy of the form, each as
described below.
Proposed Rule Change to Rule 3.31
Rule 3.31 (Registration Categories)
currently sets forth registration
requirements for principal and
representative registration categories. In
particular, Rule 3.31(a)(2) provides that
each principal as defined in paragraph
3 15
4 17
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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(a)(1) (of Rule 3.31) is required to
register with the Exchange as a General
Securities Principal, subject to certain
exceptions. More specifically, Rule
3.31(a)(2) provides that if a principal’s
activities include the functions of a
Compliance Officer, a Financial and
Operations Principal, a Securities
Trader Principal, a Securities Trader
Compliance Officer, or a Registered
Options Principal ‘‘as specified in
paragraphs (a)(3) through (a)(6) of . . .
Rule [3.31],’’ then the principal must
appropriately register in one or more of
these categories. The Exchange notes
however that the aforementioned
categories are described under
paragraphs (a)(3) through (a)(7) 5
(instead of through (a)(6)) and that the
Exchange inadvertently omitted to
cross-reference subparagraph (a)(7).
Accordingly, the Exchange proposes to
update the reference to (a)(6) to (a)(7) in
the rule text to accurately reflect the
corresponding subparagraphs to the
registration categories listed under Rule
3.31(a)(2)(A)(i).
Proposed Rule Change to Rule 3.33
Existing Rule 3.33 (Continuing
Education for Registered Persons)
includes Regulatory Elements for
Exchange registered persons. The
Regulatory Elements are Continuing
Education (‘‘CE’’) programs
administered by the Financial Industry
Regulatory Industry, Inc. (‘‘FINRA’’) and
consist of periodic computer-based
training on regulatory, compliance,
ethical, and supervisory subjects, and
sales practice standards. Pursuant to
current Rule 3.33(a)(3), the Exchange
offers the following Regulatory Elements
for Exchange registered persons: The
S201 for registered principals and
supervisors; the S106 for persons
registered only as Investment Company
and Variable Contracts Representatives;
and the S101 for all other registered
persons. The Exchange proposes to
amend Rule 3.33(a)(3), to be consistent
with FINRA’s most current CE
programs. Specifically, the Exchange
proposes to remove the language in Rule
3.33(a)(3) that provides that the S106
Regulatory Element CE Program is
offered for persons registered only as
Investment Company and Variable
Contracts Representatives. In December
2018, the content from S106 became
part of the S101 Regulatory Element CE
Program and was retired as a standalone program.6 As a result, persons
5 See Rule 3.31(a)(7), which describes the
requirements to register as a Registered Options
Principal.
6 See FINRA Information Notice, Administrative
Changes to the Continuing Education Regulatory
Element Programs (December 2, 2018), available at:
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
registered only as Investment Company
and Variable Contracts Representatives
who complete the S106 CE Program,
pursuant to Rule 3.33(a)(3), are now
required to complete the S101 CE
Program, as is currently the case for all
other registered persons. Therefore, the
Exchange proposes to update Rule
3.33(a)(3) to reflect this CE Program
change by removing the language in
Rule 3.33(a)(3) that provides that the
S106 is offered for persons registered
only as Investment Company and
Variable Contracts Representatives
while maintaining the existing language
that provides that the S101 is offered for
all other registered persons.
Proposed Rule Change to Rule 3.34
Paragraph (c) of Rule 3.34 (Electronic
Filing Requirements for Uniform
Forms), currently sets forth Form U4
filing requirements. Specifically, Rule
3.34(c) provides that initial and transfer
electronic Form U4 filings and any
amendments to the disclosure
information on Form U4 must be based
on a manually signed Form U4 provided
to the Trading Permit Holder (‘‘TPH’’) or
applicant for membership by the person
on whose behalf the Form U4 is being
filed, consistent with FINRA Rule
1010(c). However, FINRA recently
amended their Rule 1010(c) to permit
firms to choose to rely on electronic
signatures to satisfy the signature
requirements when filing Form U4.7
The Exchange proposes to amend Rule
3.34 to similarly allow firms to rely on
electronic signatures when filing Form
U4, consistent with FINRA Rule
1010(c).
Specifically, the Exchange proposes to
amend Exchange Rule 3.34, similar to
the amendments made by FINRA, to
provide firms the option of filing an
initial or a transfer Form U4 based on
a manually or an electronically signed
copy of the form provided to the TPH,
or applicant for membership, by the
individual on whose behalf the form is
being filed. As such, the proposed rule
change removes the term ‘‘manual’’
from manual signature and the term
‘‘manually’’ from manually signed in
Rule 3.34(c) and in Interpretation and
Policy .03 to Rule 3.34.8 The proposed
https://www.finra.org/rules-guidance/notices/
information-notice-100218.
7 See Securities Exchange Release No. 91262
(March 5, 2021), 86 FR 13935 (March 11, 2021) (SR–
FINRA–2021–003).
8 The proposed rule change also makes minor,
nonsubstantive formatting changes, including:
Adding a period at the end of the heading for Rule
3.34(c), which is uniform with subparagraph
headings throughout the Rulebook; and adding the
phrase ‘‘of this Rule’’ following references to
subparagraph (c)(3) to provide for additional clarity
regarding rule references.
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Federal Register / Vol. 86, No. 151 / Tuesday, August 10, 2021 / Notices
rule change provides TPHs, and
applicants for membership, with an
opportunity to better manage
operational challenges. Particularly, the
COVID–19 pandemic amplified the need
to better manage operational challenges
like those that arose during the
pandemic 9 and that may continue to
arise in the future. The proposed rule
change would not require the use of a
particular type of technology to obtain
a valid electronic signature from the
associated person. The Exchange
believes that some firms may be unable
to obtain the manual signature of
applicants for registration resulting in a
significant operational backlog. By
permitting these firms to rely on
electronic signatures to satisfy the
signature requirements of Exchange
Rule 3.34, the proposed rule change
may reduce or eliminate this backlog.
For purposes of the proposed rule
change, a valid electronic signature
would be any electronic mark that
clearly identifies the signatory and is
otherwise in compliance with the
Electronic Signatures in Global and
National Commerce Act (‘‘E-Sign Act’’)
and the guidance issued by the
Commission relating to the E-Sign Act.10
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2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.11 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 12 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
In particular, the Exchange believes
the proposed rule change promotes just
and equitable principles of trade and
9 See SR–FINRA–2021–003, 86 FR at 13937
(noting the same in connection with the FINRA
filing).
10 See accord Securities Exchange Act Release
No. 85282 (March 11, 2019), 84 FR 9573 (March 15,
2019) (Order Approving File No. SR–FINRA–2018–
040) (discussing valid electronic signatures under
existing guidance).
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
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removes impediments to and perfects
the mechanisms of a free and open
market and a national market system
and, in general, protects investors and
the public interest, by amending an
incorrect cross-reference in Rule 3.31
and a reference to an obsolete CE
Program to reflect the current CE
Programs administered by FINRA.
Moreover, the proposed rule change
updates the Exchange Rules to be
consistent with current CE Program
requirements and is designed to protect
investors by ensuring accuracy and
clarity relating to cross references in its
rules and regarding CE for TPHs in Rule
3.33. Furthermore, the proposed rule
change provides firms with the
flexibility to rely on electronic
signatures to satisfy the signature
requirements of Rule 3.34. Specifically,
the Exchange proposes to amend
Exchange Rule 3.34, similar to the
amendments made by FINRA, to
provide the option of filing an initial or
a transfer Form U4 based on a manually
or an electronically signed copy of the
form provided to the TPH, or applicant
for membership, by the individual on
whose behalf the form is being filed.
Considering the technological
advancements that provide for
enhanced authentication and security of
electronic signatures, the Exchange
believes that it is appropriate to amend
Rule 3.34 to provide such flexibility.
The proposed rule change also
addresses the ongoing public health
risks stemming from the outbreak of
COVID–19 and the operational
challenges that firms continue to face as
a result of pandemic repercussions.13 By
permitting these firms to rely on
electronic signatures to satisfy the
signature requirements of Rule 3.34, the
proposed rule change may reduce or
eliminate an operational backlog due to
the difficulty firms may have faced in
obtaining the manual signature of
applicants for registration as a result of
the impact of the pandemic on daily
work environments.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
as the proposed rule changes to update
an incorrect cross-reference and delete
an obsolete CE Program reference are
merely clarifying in nature and are not
meant to address any competitive issue.
The proposed change relating to manual
signatures is, in all material respects,
substantively identical to recent rule
changes adopted by FINRA. The
Exchange believes the proposed change
will reduce a regulatory burden for
TPHs by allowing them to rely on Form
U4 copies with an electronic signature.
All TPHs will have the option to rely on
such forms with an electronic signature
(or continue to rely on forms with a
manual signature). Also, all persons
registered only as Investment Company
and Variable Contracts Representatives
Regulatory Element are already required
to complete the S101 CE Program, as
FINRA replaced S106 with S101 in
2018; the proposed rule change just
updates the Regulatory Element number
in the Rules accordingly.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed rule changes are
based upon the same changes recently
made to FINRA Rule 1010(c) and
consistent with the current Regulatory
Element CE Programs administered by
FINRA, as well as updates an incorrect
cross-reference in the rules.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 14 and Rule 19b–
4(f)(6) 15 thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii), the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
14 15
13 See
PO 00000
supra note 9.
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15 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
10AUN1
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Federal Register / Vol. 86, No. 151 / Tuesday, August 10, 2021 / Notices
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposed rule change may become
operative immediately upon filing. As
noted by the Exchange, correcting the
cross-reference in Rule 3.31(a)(2)(A)(i)
and updating the reference to an
obsolete CE Program in Rule 3.33(a)(3)
would immediately alleviate potential
confusion in connection with the
Exchange’s publicly available rulebook.
The Exchange also states that the
proposed rule changes will help ensure
accuracy and clarity relating to cross
references in its rules and regarding CE
for TPHs. Additionally, the Exchange
notes that the proposed rule change to
Exchange Rule 3.34 is based on a similar
rule change by FINRA that has already
taken effect. Finally, as the Exchange
notes above in regard to its proposed
rule change allowing electronic
signatures to satisfy the signature
requirements of Rule 3.34, the COVID–
19 pandemic amplified the need to
better manage operational challenges
like those that arose during the
pandemic 16 and that may continue to
arise in the future.
For these reasons, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposal
operative upon filing.17
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
16 See supra note 9 (where FINRA noted the
same). In that filing, FINRA also requested and the
Commission granted a waiver of the 30-day
operative delay. See SR–FINRA–2021–003, 86 FR at
13938–9.
17 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
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Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2021–043 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2021–043. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2021–043 and should be submitted on
or before August 31, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34-92563; File No. SR–
NYSEARCA–2021–68]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change New Rule 6.91P–O
August 4, 2021.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on July 23,
2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes new Rule
6.91P–O (Electronic Complex Order
Trading) to reflect the implementation
of the Exchange’s Pillar trading
technology on its options market and to
make conforming amendments to Rule
6.47A–O (Order Exposure
Requirements—OX). The proposed
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
[FR Doc. 2021–16966 Filed 8–9–21; 8:45 am]
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15 U.S.C. 78s(b)(1).
15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1
2
18 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 86, Number 151 (Tuesday, August 10, 2021)]
[Notices]
[Pages 43701-43704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16966]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92562; File No. SR-CBOE-2021-043]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rules 3.31, 3.33 and 3.34
August 4, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 22, 2021, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been substantially prepared by the
[[Page 43702]]
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rules 3.31, 3.34 and 3.33. The text
of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is available on the Exchange's
website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx),
at the Exchange's Office of the Secretary, and at the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend certain registration rules including
(i) Rule 3.31 to update an incorrect cross-reference, (ii) Rule 3.33 to
update a Regulatory Element Program reference and (iii) Rule 3.34 to
provide the option of filing an initial or a transfer electronic Form
U4 filing and any amendments to the disclosure information on Form U4
based on a manually or an electronically signed copy of the form, each
as described below.
Proposed Rule Change to Rule 3.31
Rule 3.31 (Registration Categories) currently sets forth
registration requirements for principal and representative registration
categories. In particular, Rule 3.31(a)(2) provides that each principal
as defined in paragraph (a)(1) (of Rule 3.31) is required to register
with the Exchange as a General Securities Principal, subject to certain
exceptions. More specifically, Rule 3.31(a)(2) provides that if a
principal's activities include the functions of a Compliance Officer, a
Financial and Operations Principal, a Securities Trader Principal, a
Securities Trader Compliance Officer, or a Registered Options Principal
``as specified in paragraphs (a)(3) through (a)(6) of . . . Rule
[3.31],'' then the principal must appropriately register in one or more
of these categories. The Exchange notes however that the aforementioned
categories are described under paragraphs (a)(3) through (a)(7) \5\
(instead of through (a)(6)) and that the Exchange inadvertently omitted
to cross-reference subparagraph (a)(7). Accordingly, the Exchange
proposes to update the reference to (a)(6) to (a)(7) in the rule text
to accurately reflect the corresponding subparagraphs to the
registration categories listed under Rule 3.31(a)(2)(A)(i).
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\5\ See Rule 3.31(a)(7), which describes the requirements to
register as a Registered Options Principal.
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Proposed Rule Change to Rule 3.33
Existing Rule 3.33 (Continuing Education for Registered Persons)
includes Regulatory Elements for Exchange registered persons. The
Regulatory Elements are Continuing Education (``CE'') programs
administered by the Financial Industry Regulatory Industry, Inc.
(``FINRA'') and consist of periodic computer-based training on
regulatory, compliance, ethical, and supervisory subjects, and sales
practice standards. Pursuant to current Rule 3.33(a)(3), the Exchange
offers the following Regulatory Elements for Exchange registered
persons: The S201 for registered principals and supervisors; the S106
for persons registered only as Investment Company and Variable
Contracts Representatives; and the S101 for all other registered
persons. The Exchange proposes to amend Rule 3.33(a)(3), to be
consistent with FINRA's most current CE programs. Specifically, the
Exchange proposes to remove the language in Rule 3.33(a)(3) that
provides that the S106 Regulatory Element CE Program is offered for
persons registered only as Investment Company and Variable Contracts
Representatives. In December 2018, the content from S106 became part of
the S101 Regulatory Element CE Program and was retired as a stand-alone
program.\6\ As a result, persons registered only as Investment Company
and Variable Contracts Representatives who complete the S106 CE
Program, pursuant to Rule 3.33(a)(3), are now required to complete the
S101 CE Program, as is currently the case for all other registered
persons. Therefore, the Exchange proposes to update Rule 3.33(a)(3) to
reflect this CE Program change by removing the language in Rule
3.33(a)(3) that provides that the S106 is offered for persons
registered only as Investment Company and Variable Contracts
Representatives while maintaining the existing language that provides
that the S101 is offered for all other registered persons.
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\6\ See FINRA Information Notice, Administrative Changes to the
Continuing Education Regulatory Element Programs (December 2, 2018),
available at: https://www.finra.org/rules-guidance/notices/information-notice-100218.
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Proposed Rule Change to Rule 3.34
Paragraph (c) of Rule 3.34 (Electronic Filing Requirements for
Uniform Forms), currently sets forth Form U4 filing requirements.
Specifically, Rule 3.34(c) provides that initial and transfer
electronic Form U4 filings and any amendments to the disclosure
information on Form U4 must be based on a manually signed Form U4
provided to the Trading Permit Holder (``TPH'') or applicant for
membership by the person on whose behalf the Form U4 is being filed,
consistent with FINRA Rule 1010(c). However, FINRA recently amended
their Rule 1010(c) to permit firms to choose to rely on electronic
signatures to satisfy the signature requirements when filing Form
U4.\7\ The Exchange proposes to amend Rule 3.34 to similarly allow
firms to rely on electronic signatures when filing Form U4, consistent
with FINRA Rule 1010(c).
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\7\ See Securities Exchange Release No. 91262 (March 5, 2021),
86 FR 13935 (March 11, 2021) (SR-FINRA-2021-003).
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Specifically, the Exchange proposes to amend Exchange Rule 3.34,
similar to the amendments made by FINRA, to provide firms the option of
filing an initial or a transfer Form U4 based on a manually or an
electronically signed copy of the form provided to the TPH, or
applicant for membership, by the individual on whose behalf the form is
being filed. As such, the proposed rule change removes the term
``manual'' from manual signature and the term ``manually'' from
manually signed in Rule 3.34(c) and in Interpretation and Policy .03 to
Rule 3.34.\8\ The proposed
[[Page 43703]]
rule change provides TPHs, and applicants for membership, with an
opportunity to better manage operational challenges. Particularly, the
COVID-19 pandemic amplified the need to better manage operational
challenges like those that arose during the pandemic \9\ and that may
continue to arise in the future. The proposed rule change would not
require the use of a particular type of technology to obtain a valid
electronic signature from the associated person. The Exchange believes
that some firms may be unable to obtain the manual signature of
applicants for registration resulting in a significant operational
backlog. By permitting these firms to rely on electronic signatures to
satisfy the signature requirements of Exchange Rule 3.34, the proposed
rule change may reduce or eliminate this backlog. For purposes of the
proposed rule change, a valid electronic signature would be any
electronic mark that clearly identifies the signatory and is otherwise
in compliance with the Electronic Signatures in Global and National
Commerce Act (``E-Sign Act'') and the guidance issued by the Commission
relating to the E-Sign Act.\10\
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\8\ The proposed rule change also makes minor, nonsubstantive
formatting changes, including: Adding a period at the end of the
heading for Rule 3.34(c), which is uniform with subparagraph
headings throughout the Rulebook; and adding the phrase ``of this
Rule'' following references to subparagraph (c)(3) to provide for
additional clarity regarding rule references.
\9\ See SR-FINRA-2021-003, 86 FR at 13937 (noting the same in
connection with the FINRA filing).
\10\ See accord Securities Exchange Act Release No. 85282 (March
11, 2019), 84 FR 9573 (March 15, 2019) (Order Approving File No. SR-
FINRA-2018-040) (discussing valid electronic signatures under
existing guidance).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the proposed rule change
promotes just and equitable principles of trade and removes impediments
to and perfects the mechanisms of a free and open market and a national
market system and, in general, protects investors and the public
interest, by amending an incorrect cross-reference in Rule 3.31 and a
reference to an obsolete CE Program to reflect the current CE Programs
administered by FINRA. Moreover, the proposed rule change updates the
Exchange Rules to be consistent with current CE Program requirements
and is designed to protect investors by ensuring accuracy and clarity
relating to cross references in its rules and regarding CE for TPHs in
Rule 3.33. Furthermore, the proposed rule change provides firms with
the flexibility to rely on electronic signatures to satisfy the
signature requirements of Rule 3.34. Specifically, the Exchange
proposes to amend Exchange Rule 3.34, similar to the amendments made by
FINRA, to provide the option of filing an initial or a transfer Form U4
based on a manually or an electronically signed copy of the form
provided to the TPH, or applicant for membership, by the individual on
whose behalf the form is being filed. Considering the technological
advancements that provide for enhanced authentication and security of
electronic signatures, the Exchange believes that it is appropriate to
amend Rule 3.34 to provide such flexibility. The proposed rule change
also addresses the ongoing public health risks stemming from the
outbreak of COVID-19 and the operational challenges that firms continue
to face as a result of pandemic repercussions.\13\ By permitting these
firms to rely on electronic signatures to satisfy the signature
requirements of Rule 3.34, the proposed rule change may reduce or
eliminate an operational backlog due to the difficulty firms may have
faced in obtaining the manual signature of applicants for registration
as a result of the impact of the pandemic on daily work environments.
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\13\ See supra note 9.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act as the proposed rule changes to
update an incorrect cross-reference and delete an obsolete CE Program
reference are merely clarifying in nature and are not meant to address
any competitive issue. The proposed change relating to manual
signatures is, in all material respects, substantively identical to
recent rule changes adopted by FINRA. The Exchange believes the
proposed change will reduce a regulatory burden for TPHs by allowing
them to rely on Form U4 copies with an electronic signature. All TPHs
will have the option to rely on such forms with an electronic signature
(or continue to rely on forms with a manual signature). Also, all
persons registered only as Investment Company and Variable Contracts
Representatives Regulatory Element are already required to complete the
S101 CE Program, as FINRA replaced S106 with S101 in 2018; the proposed
rule change just updates the Regulatory Element number in the Rules
accordingly.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed rule changes are based upon the same changes recently made to
FINRA Rule 1010(c) and consistent with the current Regulatory Element
CE Programs administered by FINRA, as well as updates an incorrect
cross-reference in the rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) \15\ thereunder.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The
[[Page 43704]]
Exchange has asked the Commission to waive the 30-day operative delay
so that the proposed rule change may become operative immediately upon
filing. As noted by the Exchange, correcting the cross-reference in
Rule 3.31(a)(2)(A)(i) and updating the reference to an obsolete CE
Program in Rule 3.33(a)(3) would immediately alleviate potential
confusion in connection with the Exchange's publicly available
rulebook. The Exchange also states that the proposed rule changes will
help ensure accuracy and clarity relating to cross references in its
rules and regarding CE for TPHs. Additionally, the Exchange notes that
the proposed rule change to Exchange Rule 3.34 is based on a similar
rule change by FINRA that has already taken effect. Finally, as the
Exchange notes above in regard to its proposed rule change allowing
electronic signatures to satisfy the signature requirements of Rule
3.34, the COVID-19 pandemic amplified the need to better manage
operational challenges like those that arose during the pandemic \16\
and that may continue to arise in the future.
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\16\ See supra note 9 (where FINRA noted the same). In that
filing, FINRA also requested and the Commission granted a waiver of
the 30-day operative delay. See SR-FINRA-2021-003, 86 FR at 13938-9.
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For these reasons, the Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and
the public interest. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon
filing.\17\
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\17\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2021-043 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2021-043. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-CBOE-2021-043 and should be submitted on or before
August 31, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-16966 Filed 8-9-21; 8:45 am]
BILLING CODE 8011-01-P
